(Bloomberg) -- European stocks posted their biggest gain since November as a global rally picked up momentum following Monday’s plunge.
The Stoxx Europe 600 Index climbed 1.5% to 495.96 at the close in Paris, bouncing for a second day. Banking stocks advanced the most, while health care shares lagged after drugmaker Novo Nordisk A/S reported disappointing sales for its blockbuster weight-loss drug Wegovy.
Stocks slumped Thursday through Monday after an unexpected interest rate increase by the Bank of Japan triggered selling around the world as traders unwound bets made using money borrowed at low interest rates in Japan. Markets began recovering Tuesday, and the rally gathered momentum Wednesday after the Bank of Japan’s deputy governor said the bank won’t raise rates if markets are unstable.
“Market volumes have retraced back to trend, volatility is aggressively reversing and normalizing, a lot of technical selling has taken place and stocks have turned better bid,” said Carl Dooley, head of EMEA trading at TD Cowen. “We point to higher index levels from here.”
Novo Nordisk, Europe’s biggest listed company, dropped 6.7%, the largest plunge for shares in two years. The company, which cut its forecast for profit growth this year, said the disappointing Wegovy sales resulted from higher-than-expected price concessions to US managers of pharmacy benefits.
A flurry of second-quarter earnings drove markets. Shares in Continental AG rose as much as 6.8% after the German manufacturer improved returns at its struggling car-parts unit, which it may spin off in its biggest-ever restructuring. Puma AG shares plunged 11%, to the lowest in over six years, after the sportswear company trimmed its profit outlook amid higher freight costs and muted consumer sentiment, especially in China.
In the banking sector, shares in ABN Amro Bank added 5.6% after the Dutch lender reported stronger-than-expected profit in the second quarter and raised its guidance for lending income. By contrast, CommerzbanK AG shares declined 3.7% as the German bank reported net income for the second quarter that missed the average analyst estimate.
Stephane Deo, a senior portfolio manager at Eleva Capital SAS in Paris, said that neither the slowdown of the US economy, the unwinding of the yen carry trade nor a number of disappointing earnings were enough to justify the scale of the selloff in the last few days.
“We are gradually and cautiously coming back on the market in order not to miss the rebound,” Deo said.
For more on equity markets:
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- M&A Watch Europe: Klarna Said to Mull Secondary Sale, WPP Deal
- Spin Off Plans Resilient to Global Market Turmoil: ECM Watch
- US Stock Futures Rise With Asian Stocks After Dovish BOJ Comment
- Swimming in Fines: The London Rush
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--With assistance from Michael Msika.
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